[Federal Register Volume 68, Number 55 (Friday, March 21, 2003)]
[Rules and Regulations]
[Pages 13827-13835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6755]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 10

[T.D. 03-12]
RIN 1515-AD22


Trade Benefits Under the Caribbean Basin Economic Recovery Act

AGENCY: Customs Service, Department of the Treasury.

ACTION: Interim regulations; solicitation of comments.

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SUMMARY: This document sets forth interim amendments to those 
provisions of the Customs Regulations that implement the trade benefits 
for Caribbean Basin countries contained in section 213(b) of the 
Caribbean Basin Economic Recovery Act (the CBERA). The interim 
regulatory amendments involve the textile and apparel provisions of 
section 213(b) and in part reflect changes made to those statutory 
provisions by section 3107 of the Trade Act of 2002. The specific 
statutory changes addressed in this document involve the amendment of 
several provisions to clarify the status of apparel articles assembled 
from knit-to-shape components, the addition of language requiring any 
dyeing, printing, and finishing of certain fabrics to be done in the 
United States, the inclusion of exception language in the brassieres 
provision regarding articles entered under other CBERA apparel 
provisions, the addition of a provision permitting the dyeing, 
printing, and finishing of thread in the Caribbean region, and the 
addition of a new provision to cover additional production scenarios 
involving the United States and the Caribbean region. This document 
also includes a number of other changes to the CBERA textile and 
apparel implementing regulations to clarify a number of issues that 
arose after their original publication.

DATES: Interim rule effective March 21, 2003; comments must be 
submitted by May 20, 2003.

[[Page 13828]]


ADDRESSES: Written comments are to be addressed to the U.S. Customs 
Service, Office of Regulations and Rulings, Attention: Regulations 
Branch, 1300 Pennsylvania Avenue, NW., Washington, DC 20229. Submitted 
comments may be inspected at U.S. Customs Service, 799 9th Street, NW., 
Washington, DC.

FOR FURTHER INFORMATION CONTACT: Operational issues: Robert Abels, 
Office of Field Operations (202-927-1959). Legal issues: Cynthia Reese, 
Office of Regulations and Rulings (202-572-8790).

SUPPLEMENTARY INFORMATION: 

Background

Textile and Apparel Articles Under the Caribbean Basin Economic 
Recovery Act

    The Caribbean Basin Economic Recovery Act (the CBERA, also referred 
to as the Caribbean Basin Initiative, or CBI, statute, codified at 19 
U.S.C. 2701-2707) instituted a duty preference program that applies to 
exports of goods from those Caribbean Basin countries that have been 
designated by the President as program beneficiaries. On May 18, 2000, 
the President signed into law the Trade and Development Act of 2000, 
Public Law 106-200, 114 Stat. 251, which included as Title II the 
United States-Caribbean Basin Trade Partnership Act, or CBTPA. The 
CBTPA provisions included section 211 which amended section 213(b) of 
the CBERA (19 U.S.C. 2703(b)) in order to, among other things, provide 
in new paragraph (2) for the preferential treatment of certain textile 
and apparel articles, specified in subparagraph (A), that had 
previously been excluded from the CBI duty-free program. The 
preferential treatment for those textile and apparel articles under 
paragraph (2)(A) of section 213(b) involves not only duty-free 
treatment but also entry in the United States free of quantitative 
restrictions, limitations, or consultation levels.
    Sections 10.221 through 10.227 of the Customs Regulations (19 CFR 
10.221 through 10.227) set forth the legal requirements and procedures 
that apply for purposes of obtaining preferential treatment of textile 
and apparel articles pursuant to the provisions added to section 213(b) 
by the CBTPA. Those regulations were adopted on an interim basis in 
T.D. 00-68, published in the Federal Register (65 FR 59650) on October 
5, 2000, and took effect on October 1, 2000. Action to adopt those 
interim regulations as a final rule was withheld pending anticipated 
action on the part of Congress to amend the underlying statutory 
provisions.

Trade Act of 2002 Amendments

    On August 6, 2002, the President signed into law the Trade Act of 
2002 (the ``Act''), Pub. L. 107-210, 116 Stat. 933. Section 3107(a) of 
the Act made a number of changes to the textile and apparel provisions 
of paragraph (2)(A) of section 213(b) of the CBERA. The amendments made 
by section 3107(a) of the Act were as follows:
    1. The article description in the introductory text of paragraph 
(2)(A)(i) was amended to refer to apparel articles ``sewn or 
otherwise'' assembled and to include a reference to articles assembled 
``from components knit-to-shape.'' The amended statutory text reads as 
follows:

    Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries from fabrics wholly formed and cut, or 
from components knit-to-shape, in the United States from yarns 
wholly formed in the United States, (including fabrics not formed 
from yarns, if such fabrics are classifiable under heading 5602 or 
5603 of the HTS and are wholly formed and cut in the United States) 
that are * * *.

    2. At the end of paragraph (2)(A)(i), two new sentences were added 
to provide that apparel articles entered on or after September 1, 2002, 
will qualify for preferential treatment under paragraph (2)(A)(i) only 
if, in the case of knit fabrics and woven fabrics, all dyeing, 
printing, and finishing of the fabrics from which the articles are 
assembled is carried out in the United States. This dyeing, printing, 
and finishing provision, which applies equally to the articles covered 
by paragraph (2)(A)(i)(I) and to the articles covered by paragraph 
(2)(A)(i)(II), reads as follows:

    Apparel articles entered on or after September 1, 2002, shall 
qualify under the preceding sentence only if all dyeing, printing, 
and finishing of the fabrics from which the articles are assembled, 
if the fabrics are knit fabrics, is carried out in the United 
States. Apparel articles entered on or after September 1, 2002, 
shall qualify under the first sentence of this clause only if all 
dyeing, printing, and finishing of the fabrics from which the 
articles are assembled, if the fabrics are woven fabrics, is carried 
out in the United States.

    3. The article description in paragraph (2)(A)(ii) was reorganized 
in order to accommodate the addition of references to apparel articles 
``sewn or otherwise'' assembled and to apparel articles assembled 
``from components knit-to-shape in the United States from yarns wholly 
formed in the United States.'' In addition, the same dyeing, printing, 
and finishing language described above was added at the end of this 
paragraph. The amended paragraph (2)(A)(ii) text reads as follows:

    Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries with thread formed in the United States 
from fabrics wholly formed in the United States and cut in one or 
more CBTPA beneficiary countries from yarns wholly formed in the 
United States, or from components knit-to-shape in the United States 
from yarns wholly formed in the United States, or both (including 
fabrics not formed from yarns, if such fabrics are classifiable 
under heading 5602 or 5603 of the HTS and are wholly formed in the 
United States). Apparel articles entered on or after September 1, 
2002, shall qualify under the preceding sentence only if all dyeing, 
printing, and finishing of the fabrics from which the articles are 
assembled, if the fabrics are knit fabrics, is carried out in the 
United States. Apparel articles entered on or after September 1, 
2002, shall qualify under the first sentence of this clause only if 
all dyeing, printing, and finishing of the fabrics from which the 
articles are assembled, if the fabrics are woven fabrics, is carried 
out in the United States.

    4. The quantitative limitation provisions for knit apparel set 
forth in paragraphs (2)(A)(iii)(II) and (2)(A)(iii)(IV) were revised. 
These statutory changes do not affect the regulatory provisions and 
therefore are not dealt with in this document.
    5. In paragraph (2)(A)(iv) which covers brassieres, subclause (I) 
was amended by the addition of exception language regarding articles 
covered by certain other clauses under paragraph (2)(A). In addition, 
subclauses (II) and (III), which set forth 75 and 85 percent U.S. 
fabric content requirements that apply to articles described in 
subclause (I) beginning on October 1, 2001, were amended by replacing 
each reference to ``fabric components'' with ``fabrics,'' by adding 
exclusion language regarding findings and trimmings after each 
reference to fabric(s), and by adding various references to articles 
that are ``entered'' and that are ``eligible'' under clause (iv). Since 
the subclause (II) and (III) provisions were not dealt with in T.D. 00-
68 but rather were the subject of a separate interim rule document (see 
T.D. 01-74 published in the Federal Register at 66 FR 50534 on October 
4, 2001), the changes which section 3107(a) of the Act made to those 
provisions similarly will be dealt with in a separate rulemaking 
procedure. Accordingly, this document addresses only that portion of 
paragraph (2)(A)(iv) text that was dealt with in T.D. 00-68, that is, 
subclause (I) which, as amended by section 3107(a) of the Act, reads as 
follows:

    Subject to subclause (II), any apparel article classifiable 
under subheading 6212.10 of the HTS, except for articles entered 
under clause (i), (ii), (iii), (v), or (vi), if the article is both 
cut and sewn or otherwise assembled

[[Page 13829]]

in the United States, or one or more CBTPA beneficiary countries, or 
both.

    6. In paragraph (2)(A)(vii) which consists of multiple subclauses 
setting forth special rules regarding the treatment of certain fibers, 
yarns, materials or components for purposes of preferential treatment, 
a new subclause (V) was added to clarify the status of dyed, printed, 
or finished thread. This new provision reads as follows:

    An article otherwise eligible for preferential treatment under 
this paragraph shall not be ineligible for such treatment because 
the thread used to assemble the article is dyed, printed, or 
finished in one or more CBTPA beneficiary countries.

    7. Finally, a new clause (ix) was added to paragraph (2)(A) to 
cover hybrid operations, that is, combinations of various production 
scenarios described in other clauses under paragraph (2)(A). This new 
provision, which also incorporates the new dyeing, printing, and 
finishing language, reads as follows:

    Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries with thread formed in the United States 
from components cut in the United States and in one or more CBTPA 
beneficiary countries from fabric wholly formed in the United States 
from yarns wholly formed in the United States, or from components 
knit-to-shape in the United States and one or more CBTPA beneficiary 
countries from yarns wholly formed in the United States, or both 
(including fabrics not formed from yarns, if such fabrics are 
classifiable under heading 5602 or 5603 of the HTS). Apparel 
articles shall qualify under this clause only if they meet the 
requirements of clause (i) or (ii) (as the case may be) with respect 
to dyeing, printing, and finishing of knit and woven fabrics from 
which the articles are assembled.

    On November 13, 2002, the President signed Proclamation 7626 
(published in the Federal Register at 67 FR 69459 on November 18, 2002) 
which, among other things, in Annex I sets forth modifications to the 
HTSUS to implement the changes to section 213(b)(2)(A) of the CBERA 
made by section 3107(a) of the Act. The Proclamation provides that the 
HTSUS modifications that implement the changes made by section 3107(a) 
of the Act are effective with respect to eligible articles entered, or 
withdrawn from warehouse for consumption, on or after August 6, 2002, 
except that (1) the provisions of Annex I relating to the dyeing, 
printing, and finishing of fabrics are effective with respect to 
eligible articles entered, or withdrawn from warehouse for consumption, 
on or after September 1, 2002, and (2) the provisions of Annex I 
relating to the new quantitative limits for certain knit apparel and 
relating to the CBTPA brassieres provision are effective with respect 
to goods entered, or withdrawn from warehouse for consumption, on or 
after October 1, 2002.
    On December 31, 2002, the Office of the United States Trade 
Representative (USTR) published a notice in the Federal Register (67 FR 
79954) setting forth technical corrections to the HTSUS to address 
several inadvertent errors and omissions in various Presidential 
Proclamations. With regard to Proclamation 7626, this notice made the 
following two changes to the article description in subheading 
9820.11.18, HTSUS: (1) removal of the parenthetical exception reference 
regarding non-underwear t-shirts, effective on or after October 2, 
2000; and (2) insertion of the words ``, or from components knit-to-
shape in the United States from yarns wholly formed in the United 
States, or both'' after the phrase ``from yarns wholly formed in the 
United States,'' effective on or after August 6, 2002.

Changes to the Interim Regulatory Texts

    As a consequence of the statutory changes described above and as a 
result of the modifications to the HTSUS made by Proclamation 7626 and 
by the December 31, 2002, USTR notice, the interim CBTPA implementing 
regulations published in T.D. 00-68 no longer fully reflect the current 
state of the law. In addition, following publication of those interim 
regulations, a number of other issues came to the attention of Customs 
that warrant clarification in the CBTPA implementing regulations. 
Accordingly, this document sets forth interim amendments to the CBTPA 
implementing regulations, with provision for public comment on those 
changes, to reflect the amendments to the statute mentioned above and 
to clarify or otherwise improve those previously published regulations. 
It is the intention of Customs, after the close of the public comment 
period prescribed in this document, to publish one document that (1) 
addresses both the comments submitted on the interim regulations 
published in T.D. 00-68 and the comments submitted on the interim 
regulations set forth in this document and (2) adopts, as a final rule, 
the CBTPA implementing regulations contained in the two interim rule 
documents with any additional changes as may be appropriate based on 
issues raised in the submitted public comments. The interim regulatory 
changes contained in this document are discussed below.
Amendments To Reflect the Statutory Changes
    The interim regulatory amendments set forth in this document that 
are in response to the statutory changes made to section 213(b) of the 
CBERA by section 3107(a) of the Act are as follows:
    1. In Sec.  10.223, paragraphs (a)(1) and (a)(2) are revised to 
conform to the amendment of the product description in the introductory 
text of paragraph (2)(A)(i) of the statute. The amended regulatory text 
in each case includes a cross-reference to new paragraph (b), discussed 
below, which addresses, among other things, the new statutory provision 
regarding dyeing, printing, and finishing of fabrics.
    2. In Sec.  10.223, paragraph (a)(3) is revised to conform to the 
amendment of the product description in paragraph (2)(A)(ii) of the 
statute. The amended regulatory text also includes a cross-reference to 
new paragraph (b), discussed below, which addresses the new statutory 
provision regarding dyeing, printing, and finishing of fabrics.
    3. In Sec.  10.223, paragraph (a)(6) is revised to conform to the 
amendment of the description of brassieres contained in subclause (I) 
of paragraph (2)(A)(iv) of the statute.
    4. In Sec.  10.223, paragraph (a)(12), which corresponds to 
subheading 9820.11.18, HTSUS, is revised in order to (1) reflect the 
HTSUS changes made in the December 31, 2002, USTR notice discussed 
above and (2) include a cross-reference to new paragraph (b), discussed 
below, which addresses the new statutory provision regarding dyeing, 
printing, and finishing of fabrics.
    5. In Sec.  10.223, a new paragraph (a)(13) is added to cover the 
hybrid operations described in new clause (ix) of paragraph (2)(A) of 
the statute. This new provision also includes a cross-reference to new 
paragraph (b) which addresses the new statutory provision regarding 
dyeing, printing, and finishing of fabrics.
    6. In Sec.  10.223, paragraphs (b) and (c) are redesignated as 
paragraphs (c) and (d) and a new paragraph (b) is added primarily to 
address the issue of dyeing, printing, and finishing of fabrics. The 
following points are noted regarding this new paragraph (b) text:
    a. Customs believes that it is preferable to set forth the basic 
statutory dyeing, printing, and finishing rule in one place in the 
regulations rather than repeat it in each of the article description 
contexts to which the rule relates. Customs notes that this is similar 
to the approach taken for

[[Page 13830]]

HTSUS purposes in Annex I to Proclamation 7626 referred to above.
    b. As regards the structure of paragraph (b), it is divided into 
two parts. Paragraph (b)(1) covers dyeing, printing, and finishing 
operations and consists of a general statement followed by two specific 
limitations, the first one of which addresses the statutory rule 
adopted in the Trade Act of 2002. Paragraph (b)(2) covers post-assembly 
and other operations (for example, embroidering, stone-washing, perma-
pressing, garment-dyeing) and consists of a general statement followed 
by one specific limitation.
    c. The general statements regarding dyeing, printing, and finishing 
operations in paragraph (b)(1) and regarding other operations in 
paragraph (b)(2) are specifically intended to clarify the status of 
those operations under the CBTPA program when applied to yarns, 
fabrics, components and articles in those contexts that are not 
directly addressed in the statutory texts. The general statement in 
each case provides that the operations in question may be performed on 
any yarn or fabric or component, or on any article, without affecting 
the eligibility of an article for preferential treatment, provided that 
the dyeing, printing, finishing, or other operation is performed only 
in the United States or in a CBTPA beneficiary country. Customs 
believes that limiting those processes to the United States and CBTPA 
beneficiary countries is consistent with the overall objective of the 
CBTPA program. Customs notes in this regard that the Conference Report 
relating to the CBTPA legislation (House Report 106-606, 106th 
Congress, 2d Session) states the conferees' intent to foster increased 
opportunities for U.S. textile and apparel companies to expand co-
production arrangements with CBTPA beneficiary countries. Moreover, the 
findings of Congress in section 202 of the Trade and Development Act of 
2000 specifically referred to the offering of benefits to Caribbean 
Basin countries to ``promote the growth of free enterprise and economic 
opportunity in those neighboring countries.'' Those findings also 
stated that ``increased trade and economic activity between the United 
States and countries in the Western Hemisphere will create new jobs in 
the United States as a result of expanding export opportunities.''
    d. The dyeing, printing, and finishing provision of paragraph 
(b)(1)(i) corresponds to the statutory provision and therefore refers 
specifically to articles described in paragraphs (a)(1), (a)(2), 
(a)(3), (a)(12), and (a)(13) of Sec.  10.223. However, the regulatory 
text refers to knitted ``or crocheted'' fabrics, in order to reflect 
the terminology employed in Annex I to Proclamation 7626. In addition, 
this regulatory text includes a reference to a fabric component 
``produced from fabric'' in order to (1) reflect the fact that apparel 
articles are most often assembled from apparel components rather than 
from fabrics and (2) clarify the Customs position that knitting to 
shape does not create a fabric but rather results in the creation of a 
component that is ready for assembly without having gone through a 
fabric stage.
    e. The second provision under the general rule regarding dyeing, 
printing, and finishing operations, set forth in paragraph (b)(1)(ii), 
reflects the principle that in the case of assembled articles described 
in paragraph (a)(1), and in the case of assembled luggage described in 
paragraph (a)(10), an operation that is incidental to the assembly 
process may be performed in a CBTPA beneficiary country. This provision 
reflects the terms of subheading 9802.00.80, HTSUS, and the regulations 
under that HTSUS provision which include, in 19 CFR 10.16(c), a list of 
operations not considered incidental to assembly.
    f. The statement in the last sentence of paragraph (b)(2) regarding 
other operations is included for the same reason stated at point e. 
above in connection with paragraph (b)(1) concerning operations 
incidental to assembly under subheading 9802.00.80, HTSUS.
    7. In Sec.  10.223, a new subparagraph (3) is added at the end of 
redesignated paragraph (c) to cover the new statutory provision 
regarding dyed, printed, or finished thread.
    8. Finally, the preference group descriptions on the Certificate of 
Origin set forth under paragraph (b) of Sec.  10.224 are revised to 
reflect the amended product descriptions in the statute and to include 
a reference to articles covered by new clause (ix) of paragraph (2)(A) 
of the statute and paragraph (a)(13) of Sec.  10.223.
Other Amendments
    In addition to the regulatory amendments described above that 
result from the changes made to section 213(b) of the CBERA by section 
3107(a) of the Act, Customs has included in this document a number of 
other changes to the interim regulations published in T.D. 00-68. These 
additional changes, which are intended to clarify or otherwise improve 
the interim regulatory texts, are as follows:
    1. In Sec.  10.222, in the text of the definition of ``assembled in 
one or more CBTPA beneficiary countries,'' the word ``CBTPA'' is added 
before the words ``beneficiary countries.''
    2. Customs believes that it would be useful to include a definition 
of ``luggage'' in the regulatory texts in order to clarify the scope of 
paragraphs (a)(10) and (a)(11) of Sec.  10.223. Customs further 
believes that the meaning of this term should be consistent with trade 
practice to the greatest extent practicable. While no definition of 
luggage appears in the HTSUS, it is noted that this term was defined 
with specificity in the Subpart D headnotes to Schedule 7 of the 
predecessor Tariff Schedules of the United States (TSUS). Customs 
believes that the TSUS definition is consistent with what the industry 
would consider ``luggage'' to have been then and to be now. 
Accordingly, Sec.  10.222 is amended by the inclusion of a new 
definition of ``luggage'' that is based on the definition that appeared 
in the TSUS.
    3. Customs has found two errors in the Sec.  10.222 definition of 
``wholly formed'' as it relates to yarns or thread. First, the 
reference to ``thread'' in this context is inappropriate because the 
CBTPA texts do not use the expression ``wholly formed'' with reference 
to thread (thread needs only to be ``formed'' in the United States). 
Second, Customs failed to provide for textile strip classified in 
headings 5404 and 5405 of the HTSUS.
    Regarding the second point, it is noted that textile strip may be 
formed by extrusion, similar to the formation of filaments, or may be 
formed by slitting plastic film or sheet. With regard to what may be 
considered to be a yarn, Customs notes that ``yarn'' is defined in the 
Dictionary of Fiber & Textile Technology (KoSa, 1999), at 222, as 
follows: ``A generic term for a continuous strand of textile fibers, 
filaments, or material in a form suitable for knitting, weaving, or 
otherwise intertwining to form a textile fabric. Yarn occurs in the 
following forms: (1) A number of fibers twisted together (spun yarn), 
(2) a number of filaments laid together without twist (a zero-twist 
yarn), (3) a number of filaments laid together with a degree of twist, 
(4) a single filament with or without twist (a monofilament), or (5) a 
narrow strip of material, such as paper, plastic film, or metal foil, 
with or without twist, intended for use in a textile construction.'' 
The identical definition is found in Dictionary of Fiber & Textile 
Technology (Hoechst Celanese, 1990) at 181. There is nothing to 
indicate that Congress intended textile strip to be excluded from use 
in the CBTPA, and Customs believes the term ``yarn'' may

[[Page 13831]]

be understood to include that type of material.
    Accordingly, the definition of ``wholly formed'' as it relates to 
yarns is amended in this document by removing the words ``or thread'' 
and by adding language regarding textile strip.
    4. In Sec.  10.223(a)(4), in the second parentheses, the words 
``classifiable under subheadings 6109.10.00 and 6109.90.10 of the HTSUS 
and described in paragraph (a)(5) of this section'' are added in order 
to align the text more closely on the corresponding wording in HTSUS 
subheading 9820.11.09.
    5. With reference to the findings, trimmings and interlinings 
provisions under redesignated Sec.  10.223(c)(1), Customs believes that 
it would be useful to specify in the regulatory texts an appropriate 
basis for determining the ``cost'' of the components and the ``value'' 
of the findings and trimmings and interlinings. Customs further 
believes that the standard should be based on the regulations that 
apply to components and materials under subheading 9802.00.80, HTSUS 
(in particular, 19 CFR 10.17), and under the GSP (in particular, 19 CFR 
10.177(c)). Accordingly, this document adds a new subparagraph (ii) to 
Sec.  10.223(c)(1), with former subparagraph (ii) consequently 
redesignated as (iii), to address this point.
    6. In addition to the modification of the preference group 
descriptions on the Textile Certificate of Origin set forth under Sec.  
10.224(b) as discussed above, the format of the Certificate is modified 
and some of the blocks are reworded solely for purposes of clarity. The 
instructions for completion of the Certificate in paragraph (c) of 
Sec.  10.224 are also revised to reflect the changes made to the 
Certificate and to provide additional clarification regarding its 
completion, including provision for signature by an exporter's 
authorized agent having knowledge of the relevant facts.
    7. In the case of articles described in Sec. Sec.  10.223(a)(1) and 
(a)(10), Sec.  10.225(a) as published in T.D. 00-68 provided for the 
inclusion of the symbol ``R'' as a prefix to the applicable Chapter 98, 
HTSUS, subheading (that is subheading 9802.00.80) as the means for 
making the required written declaration on the entry documentation. 
This procedure was adopted because, contrary to the case of the other 
articles described in Sec.  10.223(a), no unique HTSUS subheading had 
been identified for these two groups of articles when T.D. 00-68 was 
published. Unique HTSUS subheadings now exist for these two groups of 
articles (that is, subheading 9802.00.8044 in the case of Sec.  
10.223(a)(1) articles and subheading 9802.00.8046 in the case of Sec.  
10.223(a)(10) articles). Accordingly, Sec.  10.225(a) has been modified 
to prescribe the same entry documentation declaration procedure for all 
articles described in Sec.  10.223, that is, inclusion of the HTSUS 
Chapter 98 subheading under which the article is classified.
    8. In Sec.  10.227(a)(2) and (3), the words ``in a CBTPA 
beneficiary country'' have been removed in recognition of the fact that 
verification of documentation and other information regarding country 
of origin and verification of evidence regarding the use of U.S. 
materials might take place outside a beneficiary country, for example 
within the United States.
    9. Finally, in addition to those conforming changes already noted 
above, some paragraph or other references within regulatory text in 
Sec. Sec.  10.223, 226 and 10.227 have been changed to conform to 
changes to the regulatory texts discussed above.

Comments

    Before adopting these interim regulations as a final rule, 
consideration will be given to any written comments timely submitted to 
Customs, including comments on the clarity of this interim rule and how 
it may be made easier to understand. Comments submitted will be 
available for public inspection in accordance with the Freedom of 
Information Act (5 U.S.C. 552), Sec.  1.5 of the Treasury Department 
Regulations (31 CFR 1.5), and Sec.  103.11(b) of the Customs 
Regulations (19 CFR 103.11(b)), on regular business days between the 
hours of 9 a.m. and 4:30 p.m. at the Office of Regulations and Rulings, 
U.S. Customs Service, 799 9th Street, NW., Washington, DC. Arrangements 
to inspect submitted comments should be made in advance by calling Mr. 
Joseph Clark at (202) 572-8768.

Inapplicability of Notice and Delayed Effective Date Requirements and 
the Regulatory Flexibility Act

    Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has 
determined that prior public notice and comment procedures on these 
regulations are unnecessary and contrary to the public interest. The 
regulatory changes provide trade benefits to the importing public, in 
some cases implement direct statutory mandates, and are necessary to 
carry out the preferential treatment and United States tariff changes 
proclaimed by the President under the Caribbean Basin Economic Recovery 
Act. For the same reasons, pursuant to the provisions of 5 U.S.C. 
553(d)(1) and (3), Customs finds that there is good cause for 
dispensing with a delayed effective date. Because no notice of proposed 
rulemaking is required for interim regulations, the provisions of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.

Executive Order 12866

    This document does not meet the criteria for a ``significant 
regulatory action'' as specified in E.O. 12866.

Paperwork Reduction Act

    The collection of information contained in this interim rule has 
previously been reviewed and approved by the Office of Management and 
Budget (OMB) in accordance with the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) under OMB control number 
1515-0226.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.

Drafting Information

    The principal author of this document was Francis W. Foote, Office 
of Regulations and Rulings, U.S. Customs Service. However, personnel 
from other offices participated in its development.

List of Subjects in 19 CFR Part 10

    Assembly, Bonds, Customs duties and inspection, Exports, Imports, 
Preference programs, Reporting and recordkeeping requirements, Trade 
agreements.

Amendments to the Regulations

    For the reasons set forth in the preamble, part 10 of the Customs 
Regulations (19 CFR part 10) is amended as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The authority citation for Part 10 continues to read in part as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 23, Harmonized 
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 
1498, 1508, 1623, 1624, 3314;
* * * * *
    Sections 10.221 through 10.228 and Sec. Sec.  10.231 through 
10.237 also issued under 19 U.S.C. 2701 et seq.


    2. In Sec.  10.222:
    a. The text of the definition of ``assembled in one or more CBTPA 
beneficiary countries'' is amended by adding the word ``CBTPA'' between 
the words ``more'' and ``beneficiary'';
    b. A new definition of ``luggage'' is added; and

[[Page 13832]]

    c. The text of the definition of ``wholly formed'' is amended by 
removing the words ``or thread'' and adding after ``filament'' the 
words '', strip, film, or sheet and including slitting a film or sheet 
into strip,'.
    The addition reads as follows:


Sec.  10.222  Definitions.

* * * * *
    Luggage. ``Luggage'' means travel goods (such as trunks, hand 
trunks, lockers, valises, satchels, suitcases, wardrobe cases, 
overnight bags, pullman bags, gladstone bags, traveling bags, 
knapsacks, kitbags, haversacks, duffle bags, and like articles designed 
to contain clothing or other personal effects during travel) and brief 
cases, portfolios, school bags, photographic equipment bags, golf bags, 
camera cases, binocular cases, gun cases, occupational luggage cases 
(for example, physicians' cases, sample cases), and like containers and 
cases designed to be carried with the person. The term ``luggage'' does 
not include handbags (that is, pocketbooks, purses, shoulder bags, 
clutch bags, and all similar articles, by whatever name known, 
customarily carried by women or girls). The term ``luggage'' also does 
not include flat goods (that is, small flatware designed to be carried 
on the person, such as banknote cases, bill cases, billfolds, bill 
purses, bill rolls, card cases, change cases, cigarette cases, coin 
purses, coin holders, compacts, currency cases, key cases, letter 
cases, license cases, money cases, pass cases, passport cases, powder 
cases, spectacle cases, stamp cases, vanity cases, tobacco pouches, and 
similar articles).
* * * * *

    3. In Sec.  10.223:
    a. Paragraphs (a)(1), (a)(2) and (a)(3) are revised;
    b. Paragraph (a)(4) is amended by removing the words ``(other than 
non-underwear t-shirts)'' and adding, in their place, the words 
``(other than non-underwear t-shirts classifiable under subheadings 
6109.10.00 and 6109.90.10 of the HTSUS and described in paragraph 
(a)(5) of this section)'';
    c. Paragraph (a)(6) is revised;
    d. Paragraph (a)(11) is amended by removing the word ``and'' after 
the semicolon;
    e. Paragraph (a)(12) is revised;
    f. A new paragraph (a)(13) is added;
    g. Paragraphs (b) and (c) are redesignated as paragraphs (c) and 
(d) respectively and a new paragraph (b) is added; and
    h. In newly redesignated paragraph (c), paragraph (c)(1)(ii) is 
redesignated as paragraph (c)(1)(iii), newly redesignated paragraph 
(c)(1)(iii) is amended by removing the words ``paragraph (b)(1)(i)(A)'' 
and adding, in their place, the words ``paragraph (c)(1)(i)(A)'' and 
removing the words ``paragraph (b)(1)(i)'' and adding, in their place, 
the words ``paragraph (c)(1)(i)'', and new paragraphs (c)(1)(ii) and 
(c)(3) are added.
    The revisions and additions read as follows:


Sec.  10.223  Articles eligible for preferential treatment.

    (a) * * *
    (1) Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries from fabrics wholly formed and cut, or from 
components knit-to-shape, in the United States, from yarns wholly 
formed in the United States (including fabrics not formed from yarns, 
if those fabrics are classifiable under heading 5602 or 5603 of the 
HTSUS and are wholly formed and cut in the United States) that are 
entered under subheading 9802.00.80 of the HTSUS, and provided that any 
other processing involving the article conforms to the rules set forth 
in paragraph (b) of this section;
    (2) Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries from fabrics wholly formed and cut, or from 
components knit-to-shape, in the United States, from yarns wholly 
formed in the United States (including fabrics not formed from yarns, 
if those fabrics are classifiable under heading 5602 or 5603 of the 
HTSUS and are wholly formed and cut in the United States) that are 
entered under Chapter 61 or 62 of the HTSUS, if, after that assembly, 
the articles would have qualified for entry under subheading 9802.00.80 
of the HTSUS but for the fact that the articles were embroidered or 
subjected to stone-washing, enzyme-washing, acid washing, perma-
pressing, oven-baking, bleaching, garment-dyeing, screen printing, or 
other similar processes in a CBTPA beneficiary country, and provided 
that any other processing involving the article conforms to the rules 
set forth in paragraph (b) of this section;
    (3) Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries with thread formed in the United States 
from fabrics wholly formed in the United States and cut in one or more 
CBTPA beneficiary countries from yarns wholly formed in the United 
States, or from components knit-to-shape in the United States from 
yarns wholly formed in the United States, or both (including fabrics 
not formed from yarns, if those fabrics are classifiable under heading 
5602 or 5603 of the HTSUS and are wholly formed in the United States), 
and provided that any other processing involving the article conforms 
to the rules set forth in paragraph (b) of this section;
* * * * *
    (6) Brassieres classifiable under subheading 6212.10 of the HTSUS, 
if both cut and sewn or otherwise assembled in the United States, or in 
one or more CBTPA beneficiary countries, or in both, other than 
articles entered as articles described in paragraphs (a)(1) through 
(a)(5), paragraphs (a)(7) through (a)(9), or paragraph (a)(12), and 
provided that any applicable additional requirements set forth in Sec.  
10.228 are met;
* * * * *
    (12) Knitted or crocheted apparel articles cut and assembled in one 
or more CBTPA beneficiary countries from fabrics wholly formed in the 
United States from yarns wholly formed in the United States, or from 
components knit-to-shape in the United States from yarns wholly formed 
in the United States, or both (including fabrics not formed from yarns, 
if those fabrics are classifiable under heading 5602 or 5603 of the 
HTSUS and are formed wholly in the United States), provided that the 
assembly is with thread formed in the United States, and provided that 
any other processing involving the article conforms to the rules set 
forth in paragraph (b) of this section; and
    (13) Apparel articles sewn or otherwise assembled in one or more 
CBTPA beneficiary countries with thread formed in the United States:
    (i) From components cut in the United States and in one or more 
CBTPA beneficiary countries from fabric wholly formed in the United 
States from yarns wholly formed in the United States (including fabrics 
not formed from yarns, if those fabrics are classifiable under heading 
5602 or 5603 of the HTSUS);
    (ii) From components knit-to-shape in the United States and one or 
more CBTPA beneficiary countries from yarns wholly formed in the United 
States; or
    (iii) From any combination of two or more of the cutting or 
knitting-to-shape operations described in paragraph (a)(13)(i) or 
paragraph (a)(13)(ii) of this section; and
    (iv) Provided that any processing not described in this paragraph 
(a)(13) conforms to the rules set forth in paragraph (b) of this 
section.
    (b) Dyeing, printing, finishing and other operations--(1) Dyeing, 
printing and finishing operations. Dyeing, printing, and finishing 
operations may be performed on any yarn, fabric, or

[[Page 13833]]

knit-to-shape or other component used in the production of any article 
described under paragraph (a) of this section without affecting the 
eligibility of the article for preferential treatment, provided that 
the operation is performed in the United States or in a CBTPA 
beneficiary country and not in any other country and subject to the 
following additional conditions:
    (i) In the case of an article described in paragraph (a)(1), 
(a)(2), (a)(3), (a)(12), or (a)(13) of this section that is entered on 
or after September 1, 2002, and that contains a knitted or crocheted or 
woven fabric, or a knitted or crocheted or woven fabric component 
produced from fabric, that was wholly formed in the United States from 
yarns wholly formed in the United States, any dyeing, printing, or 
finishing of that knitted or crocheted or woven fabric or component 
must have been carried out in the United States; and
    (ii) In the case of assembled luggage described in paragraph 
(a)(10) of this section, an operation may be performed in a CBTPA 
beneficiary country only if that operation is incidental to the 
assembly process within the meaning of Sec.  10.16.
    (2) Other operations. An article described under paragraph (a) of 
this section that is otherwise eligible for preferential treatment will 
not be disqualified from receiving that treatment by virtue of having 
undergone one or more operations such as embroidering, stone-washing, 
enzyme-washing, acid washing, perma-pressing, oven-baking, bleaching, 
garment-dyeing or screen printing, provided that the operation is 
performed in the United States or in a CBTPA beneficiary country and 
not in any other country. However, in the case of assembled luggage 
described in paragraph (a)(10) of this section, an operation may be 
performed in a CBTPA beneficiary country without affecting the 
eligibility of the article for preferential treatment only if it is 
incidental to the assembly process within the meaning of Sec.  10.16.
    (c) * * *
    (1) * * *
    (ii) ``Cost'' and ``value'' defined. The ``cost'' of components and 
the ``value'' of findings and trimmings or interlinings referred to in 
paragraph (c)(1)(i) of this section means:
    (A) The price of the components, findings and trimmings, or 
interlinings when last purchased, f.o.b. port of exportation, as set 
out in the invoice or other commercial documents, or, if the price is 
other than f.o.b. port of exportation:
    (1) The price as set out in the invoice or other commercial 
documents adjusted to arrive at an f.o.b. port of exportation price; or
    (2) If no exportation to a CBTPA beneficiary country is involved, 
the price as set out in the invoice or other commercial documents, less 
the freight, insurance, packing, and other costs incurred in 
transporting the components, findings and trimmings, or interlinings to 
the place of production if included in that price; or
    (B) If the price cannot be determined under paragraph (c)(1)(ii)(A) 
of this section or if Customs finds that price to be unreasonable, all 
reasonable expenses incurred in the growth, production, manufacture, or 
other processing of the components, findings and trimmings, or 
interlinings, including the cost or value of materials and general 
expenses, plus a reasonable amount for profit, and the freight, 
insurance, packing, and other costs, if any, incurred in transporting 
the components, findings and trimmings, or interlinings to the port of 
exportation.
* * * * *
    (3) Dyed, printed, or finished thread. An article otherwise 
described under paragraph (a) of this section will not be ineligible 
for the preferential treatment referred to in Sec.  10.221 because the 
thread used to assemble the article is dyed, printed, or finished in 
one or more CBTPA beneficiary countries.
* * * * *

    4. In Sec.  10.224, paragraphs (b) and (c) are revised to read as 
follows:


Sec.  10.224  Certificate of Origin.

* * * * *
    (b) Form of Certificate. The Certificate of Origin referred to in 
paragraph (a) of this section must be in the following format:
BILLING CODE 4820-02-P

[[Page 13834]]

[GRAPHIC] [TIFF OMITTED] TR21MR03.002

BILLING CODE 4820-02-C

[[Page 13835]]

    (c) Preparation of Certificate. The following rules will apply for 
purposes of completing the Certificate of Origin set forth in paragraph 
(b) of this section:
    (1) Blocks 1 through 5 pertain only to the final article exported 
to the United States for which preferential treatment may be claimed;
    (2) Block 1 should state the legal name and address (including 
country) of the exporter;
    (3) Block 2 should state the legal name and address (including 
country) of the producer. If there is more than one producer, attach a 
list stating the legal name and address (including country) of all 
additional producers. If this information is confidential, it is 
acceptable to state ``available to Customs upon request'' in block 2. 
If the producer and the exporter are the same, state ``same'' in block 
2;
    (4) Block 3 should state the legal name and address (including 
country) of the importer;
    (5) In block 4, insert the letter that designates the preference 
group which applies to the article according to the description 
contained in the CFR provision cited on the Certificate for that group;
    (6) Block 5 should provide a full description of each article. The 
description should be sufficient to relate it to the invoice 
description and to the description of the article in the international 
Harmonized System. Include the invoice number as shown on the 
commercial invoice or, if the invoice number is not known, include 
another unique reference number such as the shipping order number;
    (7) Blocks 6 through 10 must be completed only when the block in 
question calls for information that is relevant to the preference group 
identified in block 4;
    (8) Block 6 should state the legal name and address (including 
country) of the fabric producer;
    (9) Block 7 should state the legal name and address (including 
country) of the yarn producer;
    (10) Block 8 should state the legal name and address (including 
country) of the thread producer;
    (11) Block 9 should state the name of the folklore article or 
should state that the article is handloomed or handmade of handloomed 
fabric;
    (12) Block 10 should be completed if the article described in block 
5 incorporates a fabric or yarn described in preference group G and 
should state the name of the fabric or yarn that has been considered as 
being in short supply in the NAFTA or that has been designated as not 
available in commercial quantities in the United States;
    (13) Block 11 must contain the signature of the exporter or of the 
exporter's authorized agent having knowledge of the relevant facts;
    (14) Block 15 should reflect the date on which the Certificate was 
completed and signed;
    (15) Block 16 should be completed if the Certificate is intended to 
cover multiple shipments of identical articles as described in block 5 
that are imported into the United States during a specified period of 
up to one year (see Sec.  10.226(b)(4)(ii)). The ``from'' date is the 
date on which the Certificate became applicable to the article covered 
by the blanket Certificate (this date may be prior to the date 
reflected in block 15). The ``to'' date is the date on which the 
blanket period expires; and
    (16) The Certificate may be printed and reproduced locally. If more 
space is needed to complete the Certificate, attach a continuation 
sheet.

    5. In Sec.  10.225, paragraph (a) is revised to read as follows:


Sec.  10.225  Filing of claim for preferential treatment.

    (a) Declaration. In connection with a claim for preferential 
treatment for a textile or apparel article described in Sec.  10.223, 
the importer must make a written declaration that the article qualifies 
for that treatment. The inclusion on the entry summary, or equivalent 
documentation, of the subheading within Chapter 98 of the HTSUS under 
which the article is classified will constitute the written 
declaration. Except in any of the circumstances described in Sec.  
10.226(d)(1), the declaration required under this paragraph must be 
based on a Certificate of Origin that has been completed and properly 
executed in accordance with Sec.  10.224 and that covers the article 
being imported.
* * * * *


Sec.  10.226  [Amended]

    6. In Sec.  10.226, the second sentence of paragraph (b)(4)(ii) is 
amended by removing the reference ``Sec.  10.224(c)(14)'' and adding, 
in its place, the reference ``Sec.  10.224(c)(15)''.


Sec.  10.227  [Amended]

    7. In Sec.  10.227:
    a. Paragraph (a)(2) is amended by removing the words ``in a CBTPA 
beneficiary country'';
    b. Paragraph (a)(3) is amended by removing the words ``in a CBTPA 
beneficiary country''; and
    c. Paragraph (b)(3) is amended by removing the words ``Sec.  
10.223(c)(3)(i) through (iii)'' and adding, in their place, the words 
``Sec.  10.223(d)(3)(i) through (iii)''.

Robert C. Bonner,
Commissioner of Customs.
    Approved: February 28, 2003.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 03-6755 Filed 3-20-03; 8:45 am]
BILLING CODE 4820-02-P